Panel Declares Circumstances in Relation to Reliable Power's Bid for Pinnacle Unacceptable and Makes Interim Orders [04/04/2001] The Takeovers Panel

Wednesday, 4 April 2001


The Corporations and Securities Panel today made a declaration in relation to Reliable Power Inc's (Reliable ) off market cash takeover offer for the ordinary shares in Pinnacle VRB Limited (Pinnacle ) that unacceptable circumstances had resulted from the representation in Reliable's bidder's statement that New West Capital LLC (New West ) had agreed to provide sufficient funds to Reliable by way of equity subscription and loans to enable Reliable to meet its obligations under the offer.

The Panel has concluded that, in fact, Reliable had not made sufficient arrangements to ensure that Reliable would have funding to pay the consideration offered to shareholders under the bid, with the result that the lack of sufficient funding arrangements:

  • Detracted from an efficient, competitive and informed market in shares in Pinnacle; and
  • Had the effect that Pinnacle shareholders did not have enough information to enable them to assess the merits of Reliable's offer.

In addition, Reliable's disclosure of its funding arrangements did not comply with paragraph 636(1)(f) of the Corporations Law.

The Panel has made no finding in relation to whether, at the time that Reliable publicly announced its intention to make a takeover bid for Pinnacle, Reliable was reckless as to whether it would be able to perform its obligations relating to the takeover bid if it received acceptances for a substantial proportion of the offers under the bid.

The Panel has made interim orders restraining Reliable from dealing with any Pinnacle shares for which it receives acceptances for a period of 2 months. The Panel has requested Reliable to promptly produce evidence that it now has sufficient funding arrangements in place. If such evidence is not forthcoming, the Panel will order that the bid be stopped.

George Durbridge
Counsel, Corporations and Securities Panel
Level 47 Nauru House, 80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3553